Calcom Vision Ltd

TO THE MEMBERS

We have audited the attached Balance Sheet of CALCOM VISION LIMITED as at31^st March 2010, the Profit and Loss Account and also the Cash Flow Statementfor the year ended on that date annexed thereto. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express anopinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted inIndia. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amounts and disclosuresin the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by the management, as well as evaluating the overallfinancial statement presentation. We believe that our audit provides a reasonable basisfor our opinion.

1. As required by the Companies (Auditor’s Report) order, 2003(as amended), issuedby the Central Government of India in terms of sub -section (4A) of section 227 of theCompanies Act, 1956, we annex hereto a statement on the matters specified in paragraph 4and 5 of the said order.

2. Further to our comments in the Annexure referred to in paragraph 1 above, we reportthat:

(a) We have obtained all the information and explanations, which to the best of ourknowledge and belief were necessary for the purpose of our audit;

(b) In our opinion, proper books of accounts as required by law have been kept by thecompany so far, as appears from our examination of such books;

( c ) The Balance Sheet, Profit and Loss Account and Cash Flow Statement dealt with bythis report are in agreement with the books of account;

(d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statementdealt with by this report comply with the Accounting standards referred to in sub-section(3C) of section 211 of the Companies Act, 1956;

(e) On the basis of written representations received from the directors of the companyas on 31^st March 2010 and taken on record by the Board of Directors, we reportthat none of the Directors is disqualified as on 31^st March, 2010 from beingappointed as a director of the company in terms of clause (g) of sub-section (1) ofsection 274 of the Companies Act, 1956;

( f ) Attention is invited to Note No.9 in Schedule ‘O’, Part ‘B’,regarding management opinion that Sundry Debtors outstanding for a period of more than sixmonths, considered good amounting to Rs. 185.48 lakhs are fully recoverable and hence noprovision is made there against. Further out of this amount Rs. 112.05 is recoverable fromassociate companies covered in the register maintained U/s 301 of the Companies Act.

(g) In our opinion and to the best of our information and according to the explanationsgiven to us, the said accounts read together with the notes thereon in Schedule‘O’ given the information required by the Companies Act, 1956 in the manner sorequired and subject to Note No. 8 in Schedule ‘O’ Part ‘B’ regardingnon provision of interest due to banks. Had this provision been made, the ‘NetLoss’ for the year 2009-10 and ‘Interest Accrued and due’ would have beenhigher by Rs 341.54 Lacs, gives a true and fair view in conformity with the accountingprinciples generally accepted in India:

(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31^stMarch, 2010,

(ii) in the case of the Profit and Loss Account, of the Loss of the Company for theyear ended on that date and

(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended onthat date.

ANNEXURE REFERRED TO IN PARAGRAPH 1 OF OUR REPORT OF EVEN DATE

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) As explained to us, all the fixed assets have been physically verified by themanagement during the year and we are informed that no material discrepancies were noticedon such verification.

( c ) The company has not sold any fixed Assets during the year.

(ii) (a) The Inventory has been physically verified during the year by the management.In our opinion, the frequency of verification is reasonable

(b) The procedure of physical verification of inventory followed by the management isreasonable and adequate in relation to the size of the company and the nature of itsbusiness.

( c ) The company is maintaining the records of inventory. The discrepancies noticed onphysical verification of inventory as compared to book records, which were not material,have been properly dealt with in the books of account.

(iii) (a) The company has not granted any secured or unsecured loans to companies,firms or other parties covered in the registers maintained under Section 301 of theCompanies Act, 1956 so clause iii(a), (b),(c) & (d) of the Companies (Auditor Report)Order 2003 (as amended) are not applicable. The company has not granted any secured orunsecured loans to companies, firms or other parties covered in the registers maintainedunder Section 301 of the Companies Act, 1956.

(e) The company has not taken any fresh unsecured loans from persons covered in theregister maintained under section 301 of the Companies Act, 1956.

( f ) The rate of Interest and other terms and conditions of loans taken by theCompany, secured or unsecured, are prima facie not prejudicial to the interest of theCompany.

(g) The company did not have any loan to be repaid taken from the parties covered undersection 301 of the Companies Act. Therefore the question of non-regularity of payment ofprincipal amount and interest doesn’t arise.

(iv) In our opinion and according to the information and explanations given to us,there are adequate internal control procedures commensurate with the size of the Companyand the nature of its business with regard to purchase of inventory, fixed assets and withregard to the sale of goods and services. During the course of our audit, we have notobserved any continuing failure to correct major weaknesses in internal controls.

( v ) (a) According to the information and explanations given to us, we are of theopinion that, the particulars of contract or arrangement referred to in section 301 of theCompanies Act, 1956 have been entered in the register maintained under that section.

(b) In our opinion and according to information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registermaintained under Section 301 of the Companies Act, 1956 and exceeding the value of rupeesfive lakhs in respect of any party during the year have been made at prices which arereasonable having regard to prevailing market prices at the relevant time.

(vi) The company has not accepted any deposits from the public; hence, provisions ofSection 58A and 58AA of the Companies Act, 1956 and Companies (Acceptance of Deposit)Rules, 1975 with regard to the deposits accepted from the public are not applicable.

(vii) In our opinion, the company has an internal audit system commensurate with thesize and nature of its business.

(viii) The Central Government has not prescribed maintenance of cost records underclause (d) of sub-section (1) of Section 209 of the Companies Act, 1956 for any of theproducts of the Company.

(ix) (a) According to the records of the Company, it is generally regular in depositingwith appropriate authorities undisputed statutory dues including provident fund, investoreducation protection fund, employees state insurance, income tax, sales tax, wealth tax,custom duty, excise duty, cess and other material statutory dues applicable to it.

(b) According to the records of the Company and the information and explanations givento us, the following are particular of dues on account of excise duty / sales tax thathave not been deposited on account of any dispute:

( x ) The accumulated losses at the end of the financial year are more than its networth. The company has not incurred any cash losses during the financial year covered byour audit but had a cash loss of Rs. 18.40 Lacs during the immediately preceding financialyear.

(xi) In our opinion and according to the information and explanations given to us, thecompany has defaulted in repayment of dues to banks. The details of period and amount ofdefault as ascertained by management is as follows:

An amount of Rs. 1952.06 lacs is overdue for repayment in respect of Secured loans /Cash credit facilities taken from banks and other financial institutions as above. Asexplained to us, reasonable steps have been taken for payment of principal.

The company has not availed of any fresh loan from financial institution and has notissued any debentures.

(xii) According to information and explanations given to us, the company has notgranted any loans and advances on the basis of security by way of pledge of shares,debentures and other securities.

(xiii) The company is not a chit fund or a nidhi / mutual benefit fund/society.Therefore, the Provisions of clause 4(xiii) of the Companies (Auditor’s Report)Order, 2003 (as amended) are not applicable to the Company.

(xiv) In our opinion, the Company is not dealing in or trading in shares, securities,debentures and other investments. Accordingly, the provisions of clause 4(xiv) of theCompanies (Auditor’s Report) Order, 2003 (as amended), are not applicable to thecompany.

(xv) As informed to us, the Company has not given any guarantee for loans taken byothers from bank or financial institutions.

(xvi) In our opinion and according to the information and explanations given to us, theterm loans were applied for the purpose for which the loans were obtained. The Company hasnot availed any fresh term loan from banks or financial institutions during the financialyear covered by our audit.

(xvii) According to the information and explanations given to us and on an overallexamination of the balance sheet of the company, we report that no funds raised onshort-term basis have been used for long-term investments. No long-term funds have beenused to finance short-term assets.

(xviii) The Company has not made any preferential allotment of shares to parties andcompanies covered in the register maintained under section 301 of the Companies Act, 1956during the financial year covered by our audit.

(xix) The Company has not issued any debentures.

(xx) The Company has not raised any money by public issue during the financial yearcovered by our audit.

(xxi) According to the information and explanations given to us, no fraud on or by thecompany has been noticed or reported during the course of our audit.